News of Sjahril's detention prompts rupiah to end weaker
News of Sjahril's detention prompts rupiah to end weaker
SINGAPORE (Dow Jones): Asian currencies were mixed late Wednesday, with the Indonesian rupiah jolted as the latest twist in the tussle between the country's central bank and the government unfolds.
The rupiah, which was slightly firmer earlier in the day, was pressured to the weaker end of its narrow trading band before slowly losing more ground on news, late in the day, that central bank Governor Sjahril Sabirin had been detained.
Indonesia's attorney general is detaining Sjahril for 20 days at the attorney general's jailhouse to question him further on his alleged involvement in the Bank Bali lending scandal. The scandal centers around the illegal transfer of US$80 million from Bank Bali last year to a company controlled by a senior official of the then-ruling Golkar party.
The impact of the news on the rupiah is expected to be limited, however, as market participants had already factored in Sjahril being implicated in the Bank Bali scandal. Sjahril has been resisting calls for him to step down after being named a suspect in the scandal.
"If anything, this may be seen as negative news, but I don't think it's that strong," said Steve Brice, strategist at Standard Chartered Bank.
In late trading, the dollar was at Rp 8,645, up from Rp 8,623 late Tuesday. The rupiah was wedged within a thin trading band of between Rp 8,570 and Rp 8,630 most of the day.
The currency was buoyed by reports Indonesian President Abdurrahman Wahid plans to reshuffle his cabinet after a key meeting in August of the country's highest legislative body.
Abdurrahman cited lack of cooperation among ministers as the reason for the proposed reshuffle.
However, investors will likely remain averse to the rupiah amid political uncertainty ahead of the People's Consultative Assembly's meeting Aug. 12, analysts said.
"The political game is very much alive ahead of the August parliament session, which will keep rupiah players on the edge and prone to taking a defensive stance," said Syetarn Hasankul, economist at WestLB Research.
Other Asian currencies remained clamped within thin trading ranges after failing to breach key resistance levels recently, dealers said.
"If technical resistance levels aren't breached, I don't see a clear trend," a chief dealer at a European bank said.
Investors will remain relatively risk averse toward most Asian currencies amid uncertainty over how much higher U.S. interest rates will go and amid domestic political and economic uncertainties in some Asian countries, dealers said.
The New Taiwan dollar, however, was boosted by a local media report that quoted a central bank official as saying there is upward pressure on the island's currency, dealers said. Dealers said a report in the Economic Daily indicated that fresh inflows of foreign equity funds in June will generate strong demand for the New Taiwan dollar.
The U.S. dollar closed at NT$30.817, compared with the previous close of NT$30.833.
The South Korean won ended barely changed against the U.S. dollar Wednesday in quiet trading.
The dollar ended at 1,119.10 won, almost flat from Tuesday's close at 1,119.20 won.
The Philippine peso skidded to a new 20-month low as banks covered short dollar positions when corporate demand subsided, dealers said.
The dollar closed at 42.83 pesos at the Philippine Dealing System, its highest level since closing at 42.923 pesos on Oct. 20, 1998. The dollar closed Tuesday at 42.675 pesos.
Against the Singapore currency, the U.S. dollar took a breather following its recent rally.
Dealers said there's insufficient buying momentum Wednesday to hoist the U.S. dollar to the S$1.7350 upside target, which was breached Tuesday.
The U.S. dollar was at S$1.7340, up from S$1.7328 late Tuesday. The U.S. dollar had hit an intraday high of S$1.7355 in Asian trading Tuesday, but retreated on profit-taking in U.S. dollar positions by offshore participants.
Against the Thai currency, the dollar was at 39.175 baht, up from 39.080 baht late Tuesday.